Company engaging government on price increases
Guyanese consumers will shortly be facing their second increase in the price of locally produced flour this year and the new price increase is likely to have a further knock-on effect on the prices of bakery products and other flour-based commodities.
Managing Director of the National Milling Company (NAMILCO) Bert Sukhai told Stabroek Business earlier this week that the company will definitely be upping its prices from the present US$30 per bag shortly.
“We are presently working on the new prices and we are also currently in consultations with government on the increase,” Sukhai told Stabroek Business earlier this week.
NAMILCO last increased flour prices on March 1 this year and according to Sukhai that increase was attended by a commitment that the company would “hold prices” for two months. “We intend to stick to that commitment despite the fact that we are continuing to make losses,” Sukhai said.
Guyana is one of several Caribbean countries that continue to face increases in flour prices resulting chiefly from what Sukhai told Stabroek Business was “a continuous climb in wheat prices.” Both Jamaica and Barbados upped flour prices earlier this month.
The increase in the price of locally produced flour will almost certainly trigger price rises in flour imports from two Trinidad and Tobago flour mills which NAMILCO says are dumping flour here.
Some local producers of bakery products have told Stabroek Business that consumers could expect further hikes in bread prices once the new flour prices begin to impact on their operating costs.
And Sukhai told Stabroek Business that continually escalating wheat costs could see further increases in flour prices this year. “The price of wheat changes by the day and every time a shipment of wheat arrives here we have to pay more. We have no choice but to increase prices.”
According to Sukhai import costs to NAMILCO for high protein Spring Wheat have jumped from around US$278 per ton in January last year to the current price of US$547 per ton, an increase of 96 per cent. He said that during the same period flour prices had only been increased by 34.23 per cent.
One factor that has placed NAMILCO under pressure to keep prices down is the availability of cheaper imported flour from Trinidad and Tobago. “Whenever we have tried to increase we have lost market share,” Sukhai said.
Significantly, the announcement of an imminent price increase by NAMILCO coincides with a shortage of flour in Trinidad and Tobago occasioned by the temporary closure of one of the mills in that country, a development that has created a temporary demand for locally produced flour in the twin-island Republic.
Sukhai said that NAMILCO has been seeking to purchase wheat from various sources in order to secure the best prices. Much of the company’s wheat is imported from Canada and according to Sukhai while Germany was also a possible wheat source the current strength of the euro against the dollar made purchases from that source impracticable.
The disclosure of further increases in flour prices comes against the backdrop of what Sukhai says is a crisis facing the local milling company. Since last September – and as recently as a weeks ago – the company has been forced to opt for retrenchment of staff in what Sukhai said was a continuous process of improving the efficiency of its operations.
Sukhai said that the company was now “in survival mode” since any attempt to raise prices to a level commensurate with wheat prices would place flour beyond the reach of ordinary consumers.
Asked about the security of future wheat supplies in the face of current scarcity and rising prices Sukhai said that while rising prices was a serious issue NAMILCO was confident that it would continue to acquire wheat for flour production. He said that while the recent scarcity of wheat in the United States had impacted on the prices paid by countries in the region that relied solely on supplies from that country, NAMILCO was fortunate in that the company was able to source supplies in other countries including Argentina and Germany. “NAMILCO is part of a larger conglomerate. We have one agency that does procurement for the entire group and having that strength helps to protect us against the likelihood of running out of wheat. There are times when we will have to pay more for wheat but we feel pretty confident about supplies,” he said.
